China plans to gradually open up its futures market to overseas investors through free trade zones (FTZ), but no decision has been made yet on allowing the London Metal Exchange (LME) to set up a warehouse in the country, a regulatory official said.
China on Tuesday approved the formation of three FTZ, which will copy the model of the Shanghai FTZ established in 2013 as a testing ground for looser rules governing currency conversions and foreign direct investment.
Allowing LME warehouses in China will depend on the success in opening up futures market to overseas investors, Zhou Lichao, a director of the department of futures supervision of the China Securities Regulatory Commission (CSRC), said on Wednesday.
"For now there is no decision. I have not heard any thing about it," Zhou told Reuters on the sidelines of FOW Derivatives World Asia conference in Hong Kong.
The ban on overseas commodity exchanges setting up warehouses in China was issued by the CSRC in 2008.
The LME has tried to extend its world-wide warehouse network to China over the past several years as the country's consumption and production of metals rise and are a driving force for global prices.
In a bid to accelerate the process of opening up its domestic futures market, China will allow foreign players to trade the country's recently approved crude oil futures, Zhou told the same industry conference in Hong Kong.
CSRC approved the crude oil futures in December 2014. The regulator in January 2015 also issued draft rules to allow foreign investors to trade in some of the country's commodities futures, which Zhou said was being discussed by Chinese legislators.